I have to disagree with Paul Krugman on his assessment of the current state of the economy. While I would agree with most of his comments about the state of the stock market and housing market, and also the competence of the Trump administration, I think he is wrong in saying that we are at or near full employment.

There are a few points to be made here. First. Krugman rightly notes the aging of the population pushing down the overall labor force participation rates. However, employment to population rates for prime age workers (ages 25 to 54) are still below pre-recession levels and well below 2000 levels. The falloff is pretty much across the board, applying to both men and women and both more educated and less educated workers (not all by the same amount) suggesting that a supply side explanation is not likely. In other words, there is reason to believe that if there were more demand, more people would be working.

While the 4.1 percent unemployment rate is low by the standards of the last 45 years, it is worth noting that other major economies (e.g. Japan and Germany) now have far lower unemployment rates than almost any economist thought plausible just four or five years ago. I don’t see any reason to believe that the U.S. unemployment rate can’t fall to 3.5 percent, and possibly even lower, without kicking off an inflationary spiral.

As evidence in the other direction Krugman cites the quit rate, the percentage of workers who quit their job. He notes that this is almost back at pre-recession levels and not much below 2001 levels (the first year for which data are available). While this is true, much of the story here is a composition effect. A much smaller segment of the labor force is in sectors with low quit rates like manufacturing and the government. A larger share are in high quit rate sectors like restaurants and professional and business services.

If we look within sectors, the story is not quite so positive. In retail trade the quit rate has averaged just under 2.9 percent in the last half year. By comparison it was at 3.4 percent in the peak months in 2006 and reached 3.8 percent in 2001. These are not small differences. Even in the worst months of the Great Recession the quit rate was 1.9 percent in retail.

There is a similar story in the hotel and restaurant sector. The quit rate has averaged 4.3 percent over the last six months. It was 5.2 percent in the first six months of 2006 and 5.4 percent in the first six months of 2001. These lower quit rates indicate that we still have some way to go before workers feel confident about their labor market prospects.

Another measure that gives us a similar picture is the percent of unemployment due to people who voluntarily quit their job. This is a good measure since these are people who feel sufficiently confident of their labor market prospects that they are prepared to quit even before they have another job lined up.

This figure has averaged just 11.0 percent over the last three months. By contrast, it averaged more than 12.0 percent in the peak months of 2006 and more than 14.0 percent in the peak three months of 2000.

These figures give us good reason to believe that the labor markets can get considerably tighter before we start to see serious problems with inflation. This is an important issue because if we allow the Fed to crack down when there is still room for the economy to expand further we could be needlessly keeping millions of people from getting job and tens of millions from getting pay increases.

There undoubtedly is a point where the economy would be seeing too much demand and suffering from serious inflationary pressures, but we are likely still a considerable distance from this point.

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.